Hoover Institution  |  Stanford University

GLOBAL POLICY AND STRATEGY INITIATIVE

Progress on Critical Materials

Resilience
James Timbie, John Deutch, Rodney Ewing, James O. Ellis Jr.,
Rajeev Ram, Sulgiye Park, and David Fedor

INTRODUCTION

Demand for critical materials is growing quickly, driven by the energy transition. Here
we focus on just two of those critical materials: rare earth elements (REEs) and lithium.
Demand for REEs, important for electric vehicles (EVs), wind turbines, smartphones,
high-performance magnets, and many other commercial and national security applica-
tions, is projected to double between 2021 and 2030.1 And demand for lithium, important
for batteries for EVs and grid storage, is projected to quadruple over the same time period.2
China now dominates the extraction and processing of REEs and the processing of lithium
and other critical minerals that will play a central role in the energy transition.3

The purpose of this report is to document the progress that is being made in expanding
the extraction and processing of critical materials in the United States and in reliable
partners, and in diversifying critical material supply chains. As discussed in our first case
study on REEs, in 2010 China was responsible for more than 95 percent of global extrac-
tion.4 Expansion of extraction in Australia, the United States, and elsewhere has since
reduced China’s share of rare earth extraction to about 60 percent.5 Meanwhile, US
extraction of rare earths has increased from zero to about 16 percent of global supply
(see table 1).

TABLE 1  ​S HARES OF GLOBAL EXTRACTION OF RARE EARTH ELEMENTS

2010 2022

China . 95% . 60%

United States . 0% . 16%

A Hoover Institution Essay

 Processing of REEs is still heavily concentrated in China, with about an 85 percent
market share.6 But discernible progress toward increasing diversity in processing
REEs is underway as well, with facilities being constructed in California and Texas for
refining REEs, where initial shipments of refined products are planned for this year.

The story is similar for lithium, the subject of our second case study. Lithium is a key
component of batteries for electric vehicles and short-duration grid storage applica-
tions. China holds about a 60 percent share of lithium processing, largely because
Australia (the world’s largest lithium miner) has traditionally sent its ore concentrate
to China for processing into battery-grade lithium compounds. The first lithium pro-
cessing facility in Australia opened in 2022, and Australia aims for 10 percent of the
global market in lithium battery materials by 2024 and 20 percent by 2027. Work is
­underway in the United States, Australia, and South America to substantially expand
lithium extraction and processing and reduce the global dependence on China.

There is a long way to go, and much work to be done, to assure a sufficient and reliable
supply of critical materials for the energy transition and other important commercial and
national security purposes. With a typical timescale for mining and processing projects
on the order of sixteen years for permitting, construction, and commissioning, there is
uncertainty whether supply will align with demand. Prices are likely to continue to be
volatile. But discernible progress is being made.

We examine the interplay of market forces, government policies, and technology in pro-
moting expansion of the supply of critical materials. Market forces at work include rising
prices, increased capital investment, and growing demand from users of rare earth mag-
nets and lithium battery materials. In addition, government policies have been adopted
that aim to increase the supply by domestic producers and reliable partner nations
of materials critical to the US economy and national security. Technology can play an
important role in reducing environmental impact (by recycling water used in processing,
for example) and making extraction and refining more efficient and less wasteful. And
technology can potentially provide alternatives to critical materials for certain applica-
tions, opening up alternative paths to achieving energy transition goals. We identify
evidence that market forces, government policy, and technology are beginning to have
the desired effect of increasing supply and reducing dependence on China for critical
minerals.

We focus on REEs and lithium, recognizing that many other materials will also play
­crucial roles, including copper and nickel. Many of our observations are likely to be
applicable to those cases as well.

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RECENT GOVERNMENT POLICIES TO SUPPORT A SECURE
SUPPLY OF CRITICAL MATERIALS

In response to the growing demand for critical materials that are crucial for national
security and for the energy transition, the federal government has taken a number of
policy and program initiatives intended to increase supply, diversify supply chains, and
reduce dependence on China for critical materials. A whole-of-government approach
drawing upon the work of a broad range of agencies produced “A Federal Strategy to
Ensure Secure and Reliable Supplies of Critical Minerals” in June 2019 and “Building
Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-
Based Growth” in June 2021.7 Based on the analysis and recommendations in these
reports and comparable work by the International Energy Agency, new legislation has
been enacted to enable government action to strengthen critical material supply chains.8
The scope and scale of these government interventions represent a shift in US industrial
policy from federal support of early stages of innovation to support for deployment of
industrial facilities.

Highlights of the legislation establishing government policies and providing substantial

funding to support resilient critical material supply chains are described below.

The Infrastructure Investment and Jobs Act (IIJA), signed into law in November 2021,
provided $7.9 billion for initiatives related to critical materials.9 They include the
following:

• Grants for advanced battery material processing projects ($3 billion), for advanced
battery manufacturing projects ($3 billion), and for battery recycling projects
($335 million).

• Enhanced geological mapping of domestic mineral resources ($320 million).10

• An Energy and Minerals Research Facility ($167 million).

• A project to demonstrate the feasibility of extracting and refining rare earth elements
from wastes such as coal ash ($140 million).

• Steps to improve the permitting process for critical mineral mining on federal lands.

The Inflation Reduction Act (IRA), signed into law in August 2022, added further initia-
tives to support extraction and processing of critical materials.11 These include the
following:

• A tax credit of 10 percent of the cost of producing and refining critical minerals in
the United States.

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 • A consumer tax credit for the purchase of new EVs, the size of which depends on
the fraction of critical battery materials extracted or processed in the United States
or in a country that has a free trade agreement with the United States, or on
whether critical battery materials were derived from recycling in North America
(relevant countries with free trade agreements include Australia, Canada, Chile,
and recently Japan).12

• In addition to existing Defense Production Act (DPA) appropriations, $500 million

to strengthen the US supply chain for critical minerals. The Defense Department
has in recent years used its authority to make four grants totaling $195 million to
support development and deployment of light and heavy REE separation and refin-
ing facilities in California and Texas.13 The new funding could expand this effort to
­support domestic processing of REEs through flexible multiyear spending.14

The federal government has traditionally supported research in university and govern-
ment laboratories to advance the science and technology of mineral extraction and
processing. This work continues, aiming to increase efficiency and reduce environmental
impact and waste. Recent examples include $12 million in Department of Energy (DoE)
support for research to develop technologies to extract large quantities of lithium (com-
parable to current total US demand) as a byproduct of geothermal energy produc-
tion with a small environmental footprint and DoE funding of $70 million in projects
to advance technologies and processes for recycling EV batteries and reuse of their
critical materials.15

The new legislation gives the federal government a mandate to go beyond technology
development to support deployment of industrial-scale facilities for extraction and pro-
cessing of critical materials, backed by substantial new resources for grants and loans.
Moving quickly to use this new authority, DoE has made a conditional commitment to a
$700 million loan to support a new lithium project in western Nevada and is processing
an application for a loan for another large new lithium project in northern Nevada, both
of which will extract lithium and refine it on-site to produce battery-grade materials.16
DoE has also made a conditional commitment to a $2 billion loan to support construc-
tion of a facility in Nevada to produce battery components from recycled materials
and a $150 million grant to support construction of a lithium ore concentration facility
in North Carolina, which will support reopening a lithium mine in North Carolina and a
downstream processing facility in the southeastern United States as well.17

The US government has also taken the initiative to form, under the State Department,
the Minerals Security Partnership, a group of like-minded countries aiming to work
together to bolster critical mineral supply chains.18 Australia, Canada, Finland, France,
Germany, Japan, South Korea, Sweden, the United Kingdom, the United States, and
the European Union have joined the Minerals Security Partnership. Objectives of the
partnership include strengthened information sharing, increased investment in criti-
cal minerals, and development of recycling technologies.

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CASE STUDY: RARE EARTH ELEMENTS AND APPLICATIONS

The rare earth elements (REEs) are a group of seventeen chemical elements—atomic
numbers 57 (lanthanum) through 71 (lutetium) along with scandium and yttrium, several
of which have important commercial and national security applications.19 REEs are clas-
sified as either light or heavy depending on their atomic number. Light REEs, atomic
numbers 21 and 57–63, notably including praseodymium (Pr) and neodymium (Nd), are
typically more common and relatively easier to extract from ore. Heavy REEs, atomic
numbers 39 and 64–71, notably including terbium (Tb) and dysprosium (Dy), are less
abundant and more difficult and expensive to produce than light REEs.20

Traditional uses of REEs include fluorescent lighting and automotive exhaust catalysts.
Looking forward, REEs will play an important role in the transition to lower-carbon
energy systems. Demand for the many products underlying that transition is expected
to grow, since electric motors, consumer electronics, and modern HVAC systems and
appliances rely on compact, high-power magnets that use neodymium alloyed with iron
and boron (NdFeB). For applications where magnets must operate at elevated tempera-
tures, such as EVs and offshore wind turbines, dysprosium and terbium are added to the
NdFeB magnets. A 2.5- or 3-megawatt wind turbine requires approximately 2,000 kilo-
grams (approximately 4,400 pounds) of magnets, of which rare earth materials, including
neodymium, praseodymium, dysprosium, and terbium, account for approximately 600 kg
(approximately 1,320 lbs.).21 An electric car contains approximately 5 kg (11 lbs.).22 And
on average an iPhone contains about a third of a gram of rare earth materials.23

There is significant variability in the supply and demand for the various REEs. Some
markets are growing rapidly (EVs and wind turbines); others are stagnant (automotive
catalysts and fluorescent lighting). The natural abundance of these elements also varies
widely. The chemical similarity of REEs means they are often together in ore deposits—
although their relative abundance can vary by factors of a hundred to a thousand. For
example, rare earth ores tend to have relatively abundant cerium (Ce) and lanthanum (La),
which have limited markets. Dysprosium, in high demand for high-performance motors
and generators, is scarce. As a result, there is overproduction of some rare earths
(cerium and lanthanum) and supply shortages for others (dysprosium). Market prices
naturally reflect these supply-demand mismatches.24

Among many attempts to forecast REE consumption, the European Commission

Joint Research Centre (JRC) has produced one analysis of the balance of future
supply and demand for REEs for clean energy applications (neodymium, praseodym-
ium, dysprosium, and terbium) for both high and low demand scenarios out to 2050.
The most interesting finding of the JRC study is that the projected supply of dyspro-
sium falls short of projected demand for clean energy uses alone in a high demand
scenario. The study also notes that when all uses of rare earths are taken into account
(for traditional applications as well as for clean energy), other rare earths could be in
short supply as well. This suggests potentially stormy markets for dysprosium and a

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 FIGURE 1  Rare earth elements supply chain and market share (2022)

Upstream Midstream Downstream

REE mining & Refining & Metal & alloy Magnet

milling separating making manufacturing

Ore concentrate REE oxides Metals & alloys Magnets

China (58%) China (89%) China (92%)

USA (16%) Malaysia (7%) Japan (7%)
Myanmar (12%)
Australia (7%)

need to explore alternative technologies for substitutes for rare earths for clean energy
and traditional uses.25

Global rare earth production amounted to 240,000 kg (approximately 530,000 lbs.)

in 2020.26 According to the International Renewable Energy Agency (IRENA), about
one-third of all REEs were used in permanent magnets. Within that one-third share,
15 percent of permanent magnets went into EVs (representing around 6,000 to
9,000 kg of neodymium consumption, or approximately 13,200 to 19,800 lbs.), and
10 percent went toward wind turbines (4,000 kg neodymium, or approximately
8,800 lbs., notably for offshore turbines or, in China, in onshore turbines). This ratio
of production to consumption is expected to change over the coming decade, however,
as global wind turbine production may approximately double from current levels while
EV manufacturing could grow by ten times.27

Rare earth production flows through a supply chain that starts with mining and ore
concentration, followed by separation of the ore into individual elements in oxide form,
refining into metals, production of magnet alloys, and finally manufacturing magnets
from the alloys (figure 1). China (58 percent), the United States (16 percent), Myanmar,
and Australia dominate rare earth ore mining, with significant expansion underway in
Australia and Canada. China (89 percent) and Malaysia (7 percent) account for the vast
majority of separation of REEs, while 90 percent of refining of rare earths into metal is
done in China, with 8 percent in Southeast Asia (Thailand, Vietnam, and Laos). Magnet
alloy manufacturing is primarily in China as well (92 percent), with some in Japan
(7 percent).28 As countries shift toward greater electrification of their economies, the
United States and other global economies increasingly see it within their economic
and security interests to diversify the REE supply chain.

Canada, in particular, has adopted an aggressive critical minerals strategy from explo-
ration to mining, processing, manufacturing finished products, and recycling, and it is
investing along the entire critical materials supply chain.29 Rare earths are a priority, as
Canada has some of the world’s largest and highest quality deposits of rare earth ores.30
With a number of REE extraction, processing, and refining projects underway by private
companies with government support—and the growing demand for these minerals and

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products from its neighbor—Canada sees an opportunity to become a significant global
supplier of REEs as a complement to its other strengths in mining and energy extraction.

RESTORING A RARE EARTH ELEMENT SUPPLY CHAIN IN THE

UNITED STATES
Mountain Pass in California is the only active REE mine in the United States. As one
of the world’s richest REE deposits, Mountain Pass has a 7 percent average rare earth
content as compared with 0.1 to 4 percent for most global deposits. The Mountain Pass
mine produces rare earth ore concentrate, which is now sold to and processed in China.
However, a facility is now being commissioned at Mountain Pass to process rare earth
concentrate on-site into various rare earth products, including lanthanum, cerium, and
neodymium-praseodymium (a key component of high-performance magnets).31

Production of REEs at Mountain Pass began in the 1950s. In the 1980s, Molybdenum
Corporation of America operated the mine, which was then the world’s dominant
producer of REEs.32 An Indianapolis-based company, Magnequench, a subsidiary
of General Motors (GM), led the downstream manufacturing of REE magnets, with
important commercial and defense applications.33 The domestic REE industry grew
rapidly between the 1970s and early 1990s—the United States led in REE technology
patents and was at the forefront of REE ore processing and magnet production.

In 1998 the Environmental Protection Agency reported leaking of low-level radioactive

waste at Mountain Pass.34 Molycorp paid substantial fines, ceased processing operations
in 1998, and closed the mine in 2002. China, as a result, became the world’s supplier of
REEs. Magnequench, which held important rare earth magnet patents and production
processes, was sold to an investment consortium consisting of two China-based state-
owned enterprises, and downstream magnet manufacturing operations were relocated
to China.35

In 2010 China reduced REE exports anticipating domestic demand growth—a move
interpreted by Japan and others at the time as being in response to a geopolitical flare-up
over the disputed Senkaku Islands—leading to a spike in global REE prices.36 Sensing an
opportunity to capitalize on reduced REE exports from China, Molycorp tried to revive
REE production at Mountain Pass. The company invested $1.7 billion to modernize the
site and resume operations as a major supplier, but as a result of business miscalcula-
tions and operating deficiencies, Molycorp filed for bankruptcy in 2015.37

In 2017 MP Materials purchased the Mountain Pass mine at auction for $20.5 million—
a remarkable bargain.38 The company restarted the operations from cold-idle status
within less than a year of purchase. This was made possible by a technical services/
offtake agreement with a company in China, which provided technical services neces-
sary to begin operations at Mountain Pass: MP Materials would produce and sell the rare
earth ore concentrate to China for processing, and China would market the products to
customers.

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 With the profits earned by selling rare earth concentrate to China, MP Materials was able
to develop facilities and technologies to process rare earth concentrate at Mountain
Pass. MP Materials has successfully installed refining technologies to separate and
purify light and heavy REEs. In parallel, MP Materials is constructing a magnet manu-
facturing facility at Fort Worth, Texas.39 Once completed, the magnet production facility
in Texas will use REEs from Mountain Pass and produce up to 1,000,000 kg (approxi-
mately 2,200,000 lbs.) of NdFeB magnets annually, supporting US defense activities and
the production of 500,000 EV traction motors. This restoration of a rare earth supply
chain in the United States is supported by $700 million in venture capital through MP
Materials, $10 million and $35 million Department of Defense contracts to build facilities
at Mountain Pass to process light and heavy REEs, and a contract with GM to supply rare
earth materials and finished magnets for electric motors in GM electric vehicles.40 Initial
deliveries to GM are planned to begin in late 2023.41

In order to meet California’s strict environmental standards, MP Materials designed a

state-of-the-art facility with sustainable mining and processing practices. Efforts to mini-
mize the environmental footprint include recycling water from the ore concentration pro-
cess, leaving only solid waste materials deposited into a lined impoundment, combined
with a facility to consume waste brine and separate key reagents.

GOVERNMENT POLICY, MARKET FORCES, AND TECHNOLOGY

The restoration of Mountain Pass is an instructive example of how government policy,
commercial markets, and technology can work together to expand domestic rare earth
element infrastructure. Key elements of its progress to date include the following:

• As part of US government policy to support resilient critical material supply

chains, the Department of Defense (DoD) awarded a DPA $10 million technology
investment agreement to MP Materials in 2020 to add processing capabilities at
Mountain Pass to refine its mixed rare earth ore concentrates into separated light
REE products critical to numerous defense and commercial applications.42 In 2022,
DoD further awarded a DPA $35 million contract to design and build a process-
ing and separation facility at Mountain Pass for heavy REEs for DoD and civilian
applications.43

• Commercial support has played a major role. MP Materials has invested

$700 ­million in venture capital to fully restore a REE supply chain in the
United States. GM has supported this effort by entering into a long-term agree-
ment for supply of US-sourced rare earth materials and finished magnets for
EVs.44 MP Materials’ minority partner (8 percent) Shenghe Resources, a large
China-based rare earths firm, has supported this effort by providing technical
assistance and by purchasing the rare earth concentrates produced at the mine;
these purchases financed the construction of processing and refining capabilities
to complete the domestic supply chain.45 In addition, MP Materials has recently
entered into a contract with Japan’s Sumitomo Corporation to sell neodymium

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 and praseodymium produced at the Mountain Pass separation facilities for use in
making magnets outside China.46

• Sustainable extraction and processing technologies introduced to minimize envi-

ronmental impact avoid the problems that caused the previous owner to shut down
the operation in 2002.

Today, Mountain Pass accounts for 16 percent of global production of REEs and is
­building out a complete domestic REE supply chain.

TECHNOLOGIES THAT COULD OFFER ALTERNATIVES TO

RARE EARTH ELEMENTS
The importance of REEs in rapidly growing markets such as EVs and wind power gen-
eration motivates recent investments to strengthen REE supply chains. It is important,
however, to temper this perceived opportunity with an assessment of the technology
alternatives to employment of rare earths in system applications.

There are, for example, several alternatives to rare earth permanent magnet motors for
EV applications and for permanent magnet generators in wind turbines. For both appli-
cations, induction motors and generators (which do not require any permanent magnets)
are mature alternatives. Induction motors have been the most widely used motor since
George Westinghouse and Nikola Tesla drove the development of AC electrical distribu-
tion and transmission in the late nineteenth century. High-performance induction motors
were the primary traction motor in the original Tesla Roadster, though later models
paired these permanent magnet–free induction motors with a permanent magnet motor.
Permanent magnet motors, and rare earth (neodymium and dysprosium) permanent
magnet motors in particular, are attractive in that they provide more torque in a com-
pact, lightweight form. Even for EVs or hybrid-electric vehicles that only use perma-
nent magnet motors (such as the Toyota Prius), engineers have been designing motors
to minimize the total mass of those permanent magnet materials. Modern EV motors
balance the torque generated by the permanent magnets with that generated by non-
permanent magnetic materials such as iron (so-called internal synchronous reluctance
motors). As modern EV motors move toward a smaller mass of those permanent mag-
nets, it becomes feasible to consider replacing rare earth permanent magnets entirely
with non–rare earth magnets; while these are larger, the smaller overall mass of modern
motors means that the weight difference is less important. Indeed, in March 2022,
Tesla announced that it would be moving away from rare earth permanent magnets
in next-generation motors (likely moving to hard ferrite magnets, which are larger but
­abundant—and cheaper).47

Likewise, there are potential mature alternatives to permanent magnets for wind tur-
bines. Older generations of wind turbines more commonly used induction machines
(permanent magnet–free) paired with gearboxes in the nacelle to generate electricity.
The industry has transitioned to the use of direct-drive generators using permanent

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 magnets that can generate power even in low wind speeds as turbines increase in
scale. Such technologies are expected to be particularly valuable in the growing off-
shore wind turbine market that values the size and weight advantages of rare earth
permanent magnet generators, as well as reduced maintenance needs without a gear-
box. Alternative direct-drive wind turbine generators include replacing the permanent
magnets with electromagnets—so-called direct-drive electrically excited synchronous
generators—using either heavier conventional electromagnets or lighter-weight super-
conducting electromagnets.48 The availability of alternative motor and generator designs
suggests that there is a price-performance trade-off that indicates a fairly elastic demand
curve for rare earth permanent magnets.

TECHNOLOGIES THAT COULD OFFER ALTERNATIVES FOR SUPPLY

OF RARE EARTH ELEMENTS FOR HIGH-PERFORMANCE APPLICATIONS
For applications that are most sensitive to the size, weight, and performance advan-
tages of rare earth permanent magnet motors and generators, such as the F-35 joint
strike fighter aircraft and other DoD applications, new options can be pursued, includ-
ing development of alternative sources of scarce dysprosium and development of new
materials for high-performance magnets that do not involve rare earths. New supplies of
dysprosium could result from exploration outside of China for rare earth oxide depos-
its that are rich in dysprosium or recovery of REEs from tailings from coal mines, waste
from phosphate fertilizer mining, and bauxite waste from aluminum mining.49 While such
waste sources may only contain small concentrations of dysprosium, an inexpensive
separation and refining technology could nonetheless supply much of the demand for
permanent magnet rare earths.

Finally, new materials processing techniques have the potential to produce high-­
performance permanent magnets with even higher performance than today’s rare earth–
based permanent magnets.50 Niron Magnetics, funded by DoE and with venture support
from Volvo, Volta, and Western Digital, is exploring new crystal structures for iron-­
nitrogen permanent magnets, which have theoretical performance twice that of NdFeB.
There are also emerging advanced alloys and material engineering approaches to realiz-
ing high-performance permanent magnets that replace dysprosium and terbium with the
relatively abundant elements manganese (Mn), copper (Cu), zinc (Zn), and aluminum (Al)
to stabilize the performance of permanent magnets at high temperatures.51

CASE STUDY: LITHIUM

Lithium is present in the earth’s crust at 0.002–0.006 percent by weight. It is the thirty-

third most abundant element in nature and is distributed widely in trace amounts in
rocks, soils, and surface, ground, and sea waters. Because of its chemical reactivity,
it is not found in elemental form but in rocks, clays, and brines. In 2020 four mineral
operations in Australia, two brine operations each in Argentina and Chile, and two brine
and one mineral operation in China accounted for about 95 percent of global lithium

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production.52 One small brine operation in the United States supplied about 1 percent of
world production. Lithium demand is growing dramatically, primarily for use in lithium-
ion batteries for EVs and potentially for electric grid short-duration storage applications.
Global production expanded at a 21 percent rate from 2020 to 2021.53

Lithium prices are volatile.54 As an example, a Tesla Model S with an approximate

70 kWh battery contains the equivalent of 11.8 kg (26 lbs.) of pure lithium metal; the
lithium alone in a battery pack in 2018 would have cost about $1,000, and three times
that in 2022.55 The International Energy Agency (IEA) projects that global demand for
lithium between 2021 and 2030 will increase by four times for its Stated Policies Scenario
(which assumes continuation of existing policies and measures and those under develop-
ment) or by six times for its Announced Pledges Scenario (which is the extreme assump-
tion that countries fully implement their national targets).56 By 2030 lithium-ion batteries
are expected to account for 95 percent of global lithium demand, with production
volume expanding at an annual rate of 25 percent.57

The US Geological Survey (USGS) includes lithium on its critical materials list,
which indicates US lithium imports are greater than 50 percent of consumption (even
these imports do not include lithium embedded in finished goods imported into the
United States, especially in lithium-ion batteries for EVs). Lithium clearly is expected
to play a greatly expanded role in the forthcoming clean energy transition. Accordingly,
governments and major commercial firms around the world are taking actions to facili-
tate a r­ eliable supply and affordable cost.

One such way to ensure supply is through exploration for new mining resources and
expansion of refining capacity for those mines. Australia is the world’s largest source
of lithium (52 percent), and its mines are being substantially expanded in response to
rising demand. Until recently, Australia sent most of its lithium ore concentrate extracted
from rocks to China for refining into battery materials. Largely for this reason, China, the
third-largest source of lithium extraction (just 13 percent), controls 60 percent of the
world’s lithium refining capacity.58 In an important step to reduce dependence on China
for battery materials, the first refinery in Australia to process the output of its mines into
battery-grade lithium hydroxide began operations in 2022. A second refinery is coming
online as well, and further expansion of refining capacity in Australia is underway.
Development of capacity to refine lithium has the strong support of the Australian
­government, which forecasts that Australia could capture 10 percent of the global
market for lithium battery materials by 2024 and 20 percent by 2027.59

Chile, the second largest lithium source (25 percent), produces battery-grade lithium
compounds by evaporation of brines in high, dry deserts. Chile is also substantially
expanding production in response to projected demand and investing in technologies
to more efficiently separate lithium from brines and reduce water consumption.60 Similar
but smaller brine operations in nearby Argentina are also growing. India and Africa are
potential new sources of lithium.

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 TABLE 2  ​US, CANADIAN, AND UK FIRMS DEMONSTRATING NOVEL LITHIUM
EXTRACTION TECHNOLOGIES

Firm Direct lithium extraction technology employed

EnergyX (Puerto Rico) Uses membranes, solvents, and adsorbents to directly

capture lithium from brine.

Lilac Solutions (California) Uses ion exchange technology to extract lithium from
brines without the need for evaporation ponds.

Standard Lithium Uses solid ceramic crystalline adsorbent to ­selectively

(British Columbia) remove lithium from brines.

Controlled Thermal Combines lithium recovery with geothermal energy.

Resources (California)

Cornish Lithium (Cornwall) Removes lithium from lithium-enriched granite.

While expanding existing mines that extract lithium from rocks, firms are also exploring
new lithium extraction technologies. For example, both large and small enterprises are
exploring new methods for directly extracting lithium from brines, with the potential to
open up large new sources for lithium that cannot be exploited with existing technology,
as shown in table 2. These new projects based on brine extraction have advantages of
lower carbon dioxide emissions, lower water consumption, and less environmental dis-
ruption compared to hard rock extraction that relies on solid process crushing, roasting,
and acid leaching.61 However, brine production facilities are large and take several years
to site and build; capacity from time to time may lag market demand.

While it is not possible to predict how soon these alternative technologies will be ready
or their relative commercial viability, it is likely that one or more will be successful. The
prospects for magnesium/lithium separation from salt lake brines seem particularly
promising.62 Research is also underway to develop technology to economically extract
lithium from seawater.63

Finally, there is unmet potential in lithium recycling. Industry observers generally agree
that recycling lithium from end-of-life lithium-ion batteries will expand greatly and become
an extensive and profitable source for battery materials; recycling is likely to remain a
minor contributor to the overall global supply chain for some time, however, given the
rapid growth in the industry.

BUILDING A LITHIUM SUPPLY CHAIN IN THE UNITED STATES

Government support for lithium production has closely followed the government path for
REEs discussed in the prior section. The final “Building Resilient Supply Chains” report
released in June 2021 contains the study results of the departments of Commerce,
Energy, Defense, and Health and Human Services in response to an executive order

12   TIMBIE ET AL.  U  PROGRESS ON CRITICAL MATERIALS RESILIENCE

requesting a one-hundred-day study of America’s supply chains. In this 250-page report,
the Department of Defense, taking the lead role, devotes fifty pages to the challenges
and recommendations to revive the domestic supply chain of critical materials needed
by the domestic economy and national defense. The recommendations include sustain-
ably reshoring supply chains, cooperating with allies and partners for alternative supply
chains, and developing workforce capabilities.64

Because batteries have become—and will likely continue to be—the predominant use
of lithium, US government policy and program proposals focus on developing lithium
battery supply chains to accelerate the transition to EVs. To that end, in June 2021, DoE
issued a National Blueprint for Lithium Batteries 2021–2030 with seven goals:65

• Secure US access to raw and refined materials for lithium batteries through domes-
tic mining and processing ventures and cooperation with allies and partners.

• Increase domestic processing of critical battery materials.

• Establish an RDD&D program to develop advanced battery technologies that

employ alternative critical materials.

• Expand US lithium battery manufacturing.

• Establish and support a domestic lithium battery recycling ecosystem.

• Support development of a trained battery supply chain workforce.

• Find new approaches to public-private partnerships to align private investments

with the national blueprint.

Government programs aim to realize these goals by stimulating expansion of the domes-
tic lithium extraction and processing infrastructure, with financial support from the
2021 IIJA and the 2022 IRA and using a range of mechanisms including direct grants,
tax credits, and loan guarantees.

Under the framework of the 2021 IIJA, DoE in October 2022 announced a new initiative
“to expand domestic manufacturing of batteries for EVs and the electrical grid and for
materials and components currently imported from other countries” through $2.8 billion
in public cost share.66 In total, the 2021 IIJA funds twenty recipients across domestic
battery materials processing, battery manufacturing, and recycling. Examples are shown
in table 3.

This initiative requires significant cost sharing between the federal sponsor and the private
recipient. Such cost sharing understandably is usually accompanied by granting intel-
lectual property rights to the private sector recipient. Exclusive intellectual property (IP)

HOOVER INSTITUTION  U  STANFORD UNIVERSITY   13

 TABLE 3  ​INFRASTRUCTURE INVESTMENT AND JOBS ACT OF 2021 BATTERY SUPPLY
CHAIN FUNDING RECIPIENTS

Federal Recipient
cost cost
Project description Location Applicant ($millions) ($millions)

Cathode chemistries by (undec.) 6K $50.0 $57.4

microwave processing

US based Li ore NC Albemarle $149.7 $225.9

concentration

LiOH extraction from US NV ABTC $57.7 $57.7

sedimentary resources

Prelithiation anode (undec.) App. Materials $100.0 $124.0

­manufacturing facility

Recycle lithium from spent KY Ascend Elements $316.2 $316.2

Li-ion batteries

Cathode active material KY Ascend Elements $164.4 $164.4

manufacturing plant

Upgrade Li-ion battery OH Cirba Solutions $75.0 $107.5

­recycle facility

Li-ion battery separator OR ENTEK $100.0 $1,240.0

manufacture

Li Fe phosphate powder MO ICL $197.3 $232.3

(LFP) production

Manufacturing Li LA Koura/Orbia $100.0 $306.6

­hexafluorophosphate (LiPF6)

Lithium extraction ion NV Lilac $50.0 $129.3

exchange technology

Lithium hydroxide domestic TN Piedmont Li $141.7 $430.6

rock resource

Silicon anode material for WA Sila $100.0 $300.0

Li-ion batteries

Total $1,602.0 $3,692.0

Source: Department of Energy, “Bipartisan Infrastructure Law Battery: Materials Processing and Battery
Manufacturing & Recycling Funding Opportunity Announcement, Factsheets,” November 1, 2022, https://­
www​.­energy​.­gov​/­sites​/­default ​/­files​/­2 022​-­11​/­DOE%20BIL%20Battery%20FOA​-­2 678%20Selectee%20
Fact%20Sheets​.­pdf.

14   TIMBIE ET AL.  U  PROGRESS ON CRITICAL MATERIALS RESILIENCE

ownership can, however, arguably slow broad diffusion of a new technology that
is otherwise a principal objective of such a clean energy initiative. Resolution of the
cost ­sharing/IP conflict is not easy; the issue deserves more attention, and broad
public/­private partnership may help avoid the issue.

DoE has other support programs to implement the lithium battery provisions of the
2022 IRA. The DoE Loan Programs Office (LPO), for example, has made a provisional
award of $2 billion to Redwood Materials of McCarran, Nevada, for a closed loop end-
of-life lithium-ion battery recycling facility.67 The LPO has also made a $2.5 billion award
to Ultium, a joint venture between GM and LG Energy Solution, to manage three lithium-
ion battery manufacturing facilities in Ohio, Tennessee, and Michigan.68 And in 2023,
LPO announced a conditional $700 million award to the Ioneer Rhyolite Ridge project
in Nevada to finance on-site processing of lithium carbonate.69 This plant will produce
about 24,000,000 kg (approximately 53,000,000 lbs.) of lithium carbonate per year for
domestic commercial and defense purposes.70

These are substantial US government initiatives, motivated to assure reliable US access

to lithium battery materials and lithium batteries for commercial and national security
purposes. The United States is not alone in renewed efforts to secure critical supply
chains. Partners in the European Union, for example, have recently approved ∉3.2 billion
in public cost-share, combined with ∉5 billion from private firms, to fund seventeen par-
ticipants to scale up innovations in support of development of a European battery supply
chain infrastructure. The projects are expected to be completed by 2031.71

GOVERNMENT POLICY, MARKET FORCES, AND TECHNOLOGY

An instructive example of how government policy, commercial markets, and technol-
ogy can work together to expand domestic lithium infrastructure is the Lithium Americas
Thacker Pass project in northern Nevada, which will exploit the largest known lithium
resource in the United States. This project has the potential to extract lithium from clays
with an annual volume equivalent to 15 percent of global 2021 lithium production and
to process it on-site to produce battery-grade lithium carbonate on a scale sufficient
to supply the needs for up to one million electric vehicles per year.72 Key factors in
the project’s genesis include the following:

• Federal and state governments have supported this project by providing all nec-
essary permits to begin construction, and DoE’s Advanced Technology Vehicles
Manufacturing Loan Program is (as of early 2023) processing an application to
­provide up to 75 percent of the capital costs of construction.

• GM, meanwhile, has provided substantial commercial support with an equity

investment of $650 million in this project, in return for exclusive access to the lith-
ium carbonate produced in an initial phase for the first ten years, with an option to
extend for an additional five years. As a result of this transaction, GM has become

HOOVER INSTITUTION  U  STANFORD UNIVERSITY   15

 the largest shareholder in the project’s parent company, supplanting China’s
Ganfeng Lithium.

• Various best-available advanced mining and processing technologies are used to

minimize the environmental footprint, including by recycling water and reducing
waste and emissions.

Construction of the mine and the processing facility is now underway, with production of
lithium carbonate to begin in 2026. Government policies, market forces, and innovative
technologies are combining to develop this substantial new domestic source of critical
materials for batteries.

In sum, the lithium story is becoming clearer: identification of a potential lithium avail-
ability “crisis” due to explosive demand for electric vehicle deployment ignited a range
of responses from both the US government and major private firms. It is not yet certain
that prices, markets, and technologies will respond in a way that will make all antici-
pated uses affordable, but many signs point in the right direction. As with REEs, China
has a strong position in the global lithium market, with about 60 percent of global pro-
duction of refined lithium battery materials. And as with REEs, China also now holds
strong positions in the intellectual property surrounding many battery-related produc-
tion processes given its industrial progress in this area over the past decade.73 This will
be a new challenge for the United States and like-minded partners to navigate. At the
same time, China’s global power may face limitations going forward. China produces
more EVs than any other country, and continued high growth for China’s EV market is
projected through 2040.74 China’s own massive domestic demand, combined with new
supply-side efforts of the United States, Australia, Chile, and other countries, may help
to constrain China’s ability to increase its influence in the global lithium supply chain
market.

ISSUES TO WATCH

Notwithstanding a promising start, the effort to produce critical materials on the neces-
sary scale, with reliable partners, at affordable prices, has a long way to go. A number of
factors will determine how successfully reliable supply will meet growing demand.

TIME
Demand for critical materials for the energy transition is already growing strongly and
is projected to continue to rise over the next decade and beyond.75 The positive trends
we now see are the results of projects already underway. New mineral projects average
sixteen years to develop.76 Meeting future demand will require persistence and strong
investment growth over an extended period of time.

16   TIMBIE ET AL.  U  PROGRESS ON CRITICAL MATERIALS RESILIENCE

INNOVATION
Advances in the technology of separating REEs without problematic solvents support
the siting of processing operations in the United States and other countries with strong
environmental standards.77 Technological innovation could also in the future provide
alternatives to REEs and lithium for certain applications. Other possibilities for innovation
include extracting lithium from hot brines that are already being brought to the surface for
geothermal energy production. If the science of extracting lithium from geothermal brines
in a cost-competitive manner can be developed and demonstrated, the area near the
Salton Sea in Southern California has the potential to produce lithium on a scale compa-
rable to the current annual US demand with minimal environmental impact.78

Technological surprises are always possible. For example, there is much research activ-
ity directed to using sodium instead of lithium in batteries for EVs, especially in China.79

PRICES AND VOLATILITY

Low prices for critical materials support the production of affordable EVs, while high
prices support investment in increased supply. The volatility of the spot price of lithium
illustrated in figure 2 reflects in part fluctuations in production of EVs. Long-term contracts
between lithium producers and manufacturers of EVs and batteries can increase pre-
dictability of price and supply and help to balance supply with demand.

FIGURE 2  Five years of lithium prices

90

80

70

60
$US per kilogram

50

40

30

20

10

0
6/20/18 6/20/19 6/20/20 6/20/21 6/20/22 6/20/23

Note: Lithium carbonate (minimum 99 percent purity) price in nominal US dollars (6/20/18 to 6/20/23,
Shanghai daily spot market).

Source: Bloomberg, June 2023.

HOOVER INSTITUTION  U  STANFORD UNIVERSITY   17

 ENVIRONMENTAL AND SOCIAL ISSUES
Friction with the local community is a serious challenge to siting, construction, and
operation of mineral extraction and processing projects. In our example of the Thacker
Pass lithium mine and processing facility, the company committed to employ locally and
work with local service providers and worked to establish a relationship with the larg-
est nearby indigenous tribe, including by jointly conducting a cultural assessment of
the site and by entering into a community benefits agreement with the tribe providing
for workforce training and infrastructure development (a community center, a school,
and highway improvements). Nevertheless, environmental groups, a local rancher, and
other tribes brought multiple suits to block the project. These challenges were rejected
by the court, and construction commenced in March 2022.80 Research suggests that
environmental and social challenges are a major risk to siting of new mineral projects
and expansion of existing operations.81 Recognition and mitigation of environmental
and social risk are also necessary to attract investment in mineral projects.82

TRADE WITH ALLIES AND PARTNERS

Increasing the supply of critical materials on the necessary scale will require substan-
tial expansion of extraction and processing by reliable allies and partners as well as the
United States. The consumer tax credits of the Inflation Reduction Act favor EVs with
battery materials extracted or processed in the United States and in countries with free
trade agreements with the United States (importantly including Australia, Canada, and
Chile). The recent rapid conclusion of a free trade agreement with Japan for lithium,
nickel, cobalt, graphite, and manganese is a promising recognition of the importance
of trade in critical materials with reliable partners.83

CHINA
China dominates the extraction and processing of critical materials for many reasons,
greatly complicating the effort to diversify supply as demand grows. Factors underlying
that dominance include the following:

• Some of China’s resources have advantages in geology. A single mine near Baotou
contains more than 40 percent of the total known REE reserves in the world, and it
accounts for nearly half of global REE production. The REEs are a byproduct of iron
ore mining operations, reducing costs.84

• The rest of the world has outsourced to China, with its more limited environmental
controls, the key step of separation of REEs into individual elements, which tradi-
tionally uses large amounts of problematic solvents.

• With many years of operational experience, China’s firms know how to tailor sepa-
ration processes to the output of individual mines.

18   TIMBIE ET AL.  U  PROGRESS ON CRITICAL MATERIALS RESILIENCE

 • At the top of the rare earth value chain—high-strength permanent magnets—China
has a 95 percent market share, exploiting advantages in labor costs, materials
costs, technology, and product range.85

• China’s state-owned enterprises do not need to make a profit to survive.

OTHER CRITICAL MATERIALS

This essay has focused on REEs and lithium, but many of the issues and trade-offs apply
to other materials crucial for the energy transition, including copper, nickel, and cobalt.
As supply and demand grow, Africa will play an increasingly important role in the extrac-
tion and processing of a range of critical materials. Africa already produces more than
two-thirds of the world’s cobalt, bauxite, and platinum, and is becoming a supplier of
lithium.86 Sensing an opportunity, South Africa plans to host an African Critical Minerals
Summit in October 2023 with global participation of key producers and users of mineral
resources that underpin modern societies, aiming to attract diverse investment partners
in mining, processing, and manufacturing products using African mineral resources, and
to create sustainable jobs with an upskilled workforce.87

CONCLUSIONS AND RECOMMENDATIONS

This report has shown how a combination of market forces, government policy, and new
technologies on both the supply and demand side are beginning to demonstrate mea-
surable progress in increasing supply and reducing US dependence on China for rare
earth elements and lithium, which together with other materials such as copper are set
to become more central to our economy and national security in the coming decades.

But scale matters. This sector faces uncertainty in both growth in demand for these
materials—e.g., the adoption rate of electric vehicles, or the use of lithium batteries
versus alternate forms of electric grid energy storage, or the degree and pace of overall
electrification within the United States, or China’s own economy—and growth in supply,
given the long lead times for extraction and processing projects. And many US allies and
partners share our interest in not building a future energy economy that is entirely depen-
dent on China and other problematic countries. Our energy and economic transition
goals should continue to be informed by maintaining a balance of supply and demand
so as to not drive new insecurities.

To that end, today’s early progress should continue to be supported across each of
these three realms—markets, policy, and technology—with a mind to sustaining that
progress as the sector scales. Our recommendations to support such scaling include
the following:

HOOVER INSTITUTION  U  STANFORD UNIVERSITY   19

 • To sustain market forces, prices for these commodities should continue to reflect
global supply and demand—rather than being made subject to domestic price caps
or floors—as prices convey information to investors and consumers. As global pro-
duction capacity grows, attention should also be paid to below-cost dumping by
incumbent mineral producers or processors that could disrupt fragile markets, a
practice that contributed to today’s dependence on China. To support such market
transparency, Congress and relevant agencies should consider the adequacy and
complementarity of existing USGS mineral commodity databases with the separate
authorities for data collection and analysis of energy commodities and fuels that
are afforded to the DoE’s Energy Information Administration.

• Recent government policy has focused on subsidizing the supply and demand
sides of diversified critical mineral supply chains through targeted domestic invest-
ments. Current negotiations over tax credit applicability with US partners show that
like-minded nations also see this sector as an opportunity for new collaboration.
US policy should prioritize diversification over protectionism. As we compete in
that global marketplace, a scalable long-term domestic strategy will be one that
sustains the competitiveness of doing business in the United States by finding suit-
able ways to reduce underlying costs in this sector. Capital (tax) efficiency, more
certainty in timelines on permitting, coordination across agency reviews, flexibility
in labor markets, and an appreciation for the national security benefits of critical
technology domestic commerce within executive branch regulatory body decision
making can all help. Minerals-oriented regulatory streamlining should be pursued
by Congress as a package alongside similar reforms now being considered for
other critical energy infrastructure.

• Finally, advancing technologies that increase efficiency, reduce impact on the

environment, reduce waste, and promote recycling are crucial to attracting glob-
ally diversified supply chain investment at scale. These technologies support the
competitiveness of US firms, yielding both private and public benefits. Federal
tax policy can encourage continued private R&D investment, and the govern-
ment should continue to fund the basic science that supports future technologies.
Nuanced attention is needed on the matter of the IP underlying these capabilities
and processes, protections for IP holders and for transfers of future IP, and treat-
ment of IP generated under public-private partnerships in a way that balances
­private investment incentives with public interest.

NOTES
1. ​International Energy Agency (IEA), “The Role of Critical Minerals in Clean Energy Transitions,”
revised March  2022, 152, https://­iea​.­blob​.­core​.­windows​.­net ​/­assets​/­ffd2a83b​-­8 c30 ​-­4 e9d​-­9 80a​
-­52b6d9a86fdc​/ ­TheRoleofCriticalMineralsinCleanEnergyTransitions​.­pdf.
2. ​IEA, “Global EV Outlook 2022: Securing Supplies for an Electric Future,” May 2022, 176,
https://­iea​.­blob​.­core​.­windows​.­net ​/­assets​/­ad8fb04c​-­4f75​-­42fc​-­973a​-­6e54c8a4449a​/­Global​
ElectricVehicleOutlook ​2 022​.­pdf.

20   TIMBIE ET AL.  U  PROGRESS ON CRITICAL MATERIALS RESILIENCE

3. ​IEA, “Role of Critical Minerals.”
4. ​IEA, “Role of Critical Minerals,” 153.
5. ​Xianbin Yao, “China Is Moving Rapidly Up the Rare Earth Value Chain,” BRINK News, Marsh
McLennan, August  7, 2022, https://­w ww​.­brinknews​.­com​/­china​-­is​-­moving​-­rapidly​-­up​-­the​-­rare​
-­earth​-­value​-­chai.
6. ​Yao, “China Is Moving Rapidly.”
7. ​US Department of Commerce, “A Federal Strategy to Ensure Secure and Reliable Supplies of
Critical Minerals,” June  4, 2019, https://­w ww​.­commerce​.­gov​/­data​-­and​-­reports​/­reports​/­2019​/­0 6​
/­federal​-­strategy​-­ensure​-­secure​-­and​-­reliable​-­supplies​-­critical​-­minerals; White House, “Building
Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-Based
Growth,” June  2021, https://­w ww​.­whitehouse​.­gov​/­wp​-­content ​/­uploads​/­2 021​/­0 6​/­100 ​-­day​
-­supply​-­chain​-­review​-­report​.­pdf.
8. ​IEA, “Role of Critical Minerals.”
9. ​Davis Graham & Stubbs, “Not Just Roads—Infrastructure Act Offers Opportunities and Funding
for Carbon Capture, Oil and Gas Infrastructure, Critical Minerals, and Mining Communities,”
November  22, 2021, https://­w ww​.­dgslaw​.­com​/­news​-­events​/­dgs​-­legal​-­alert​-­not​-­just​-­roads​
-­historic​-­infrastructure​-­act​-­offers​-­opportunities​-­and​-­funding​-­for​-­carbon​-­capture​-­oil​-­and​-­gas​
-­minerals​-­and​-­mines.
10. ​Paul Voosen, “Treasure Hunt: The First US Nationwide Geological Survey in a Generation
Could Reveal Badly Needed Supplies of Critical Minerals,” Science 380, no. 6648 (June 2,
2023): 883–87, https://­w ww​.­science​.­org​/­content​/­article​/­major​-­us​-­geological​-­survey​-­aims​-­uncover​
-­minerals​-­critical​-­batteries​-­microchips.
11. ​Meaghan Connors, J. Paul Forrester, and Kevin L. Shaw, “Strengthening the US Supply
Chain for Critical Minerals and the Inflation Reduction Act—Opportunities and Challenges,”
Mayer Brown, September  29, 2022, https://­w ww​.­mayerbrown​.­com​/­en​/­perspectives​-­events​
/­publications​/­2 022 ​/­0 9​/­s trengthening​-­the​-­us​-­supply​-­chain​-­for​-­critical​-­minerals​-­and​-­the​
-­inflation​-­reduction​-­act​-­opportunities​-­and​-­challenges.
12. ​The US Treasury and the Internal Revenue Service are working to identify additional
countries with trade agreements with the United States for the purposes of implementation
of the critical minerals provisions of the Inflation Reduction Act. See US Department of the
Treasury, “Anticipated Direction of Forthcoming Proposed Guidance on Critical Mineral and
Battery Component Value Calculations for the New Clean Vehicle Credit,” 3, https://­home​
.­treasury​.­gov​/­system​/­files​/­136​/­3 0DWhite​-­Paper​.­pdf.
13. ​US Department of Defense (DoD), “DOD Announces Rare Earth Element Awards to
Strengthen Domestic Industrial Base,” November  17, 2020, https://­w ww​.­defense​.­gov​/­News​
/­Releases​/­Release​/­Article​/­2418542​/­dod​-­announces​-­rare​-­earth​-­element​-­awards​-­to​-­strengthen​
-­domestic​-­industrial​-­base. For California, also see DoD, “DoD Awards $35 Million to MP Materials
to Build US Heavy Rare Earth Separation Capacity,” February 22, 2022, https://­w ww​.­defense​.­gov​
/­News​/­Releases​/­Release​/­Article​/­2 941793​/­dod​-­awards​-­3 5​-­million​-­to​-­mp​-­materials​-­to​-­build​-­us​
-­heavy​-­rare​-­earth​-­separation​-­c. For Texas, also see Industrial Base Policy, Assistant Secretary
of Defense, “DoD Awards Key Contract for Domestic Heavy Rare Earth Separation Capability,”
June 14, 2022, https://­w ww​.­businessdefense​.­gov​/­news​/­2 022 ​/­DoD​-­Awards​-­Key​-­Contract​-­for​
-­Domestic​-­Heavy​-­Rare​-­Earth​-­Separation​-­Capability​.­html.
14. ​These Title III authorities allow flexible one-off loans and grant making to willing private
sector entities and are intended to develop certain capabilities, as opposed to more commonly
conceived DPA Title I authorities in which the president can compel private firms to undertake
preferential contracting.
15. ​See US Department of Energy, “DOE Issues Notice of Intent to Fund Lithium Extraction
and Conversion for Strong Domestic Supply Chains,” October 5, 2022, https://­w ww​.­energy​.­gov​
/­eere​/­geothermal​/­articles​/­doe​-­issues​-­notice​-­intent​-­fund​-­lithium​-­extraction​-­and​-­conversion​
-­strong; US Department of Energy, “Biden-Harris Administration Announces Nearly $74 Million
to Advance Domestic Battery Recycling and Reuse, Strengthen Nation’s Battery Supply Chain,”

HOOVER INSTITUTION  U  STANFORD UNIVERSITY   21

 November  16, 2022, https://­w ww​.­energy​.­gov​/­articles​/­biden​-­harris​-­administration​-­announces​
-­nearly​-­74​-­million​-­advance​-­domestic​-­battery​-­recycling.
16. ​US Department of Energy, “LPO Announces Conditional Commitment to Ioneer Rhyolite
Ridge to Advance Domestic Production of Lithium and Boron, Boost US Battery Supply Chain,”
January  13, 2023, https://­w ww​.­energy​.­gov​/­lpo​/­articles​/­lpo​-­announces​-­conditional​-­commitment​
-­ioneer​-­rhyolite​-­ridge​-­advance​-­domestic​-­production; GlobeNewswire, “Lithium Americas
Receives Letter of Substantial Completion for Application to US DOE ATVM Loan Program,”
news release, February  22, 2023, https://­w ww​.­globenewswire​.­com​/­news​-­release​/­2 023​/­0 2​/­22​
/­2613834​/­0​/­en​/­Lithium​-­Americas​-­Receives​-­Letter​-­of​-­Substantial​-­Completion​-­for​-­Application​-­to​
-­U​-­S​-­DOE​-­ATVM​-­Loan​-­Program​.­html.
17. ​For Nevada, see US Department of Energy, “LPO Offers Conditional Commitment to Redwood
Materials to Produce Critical Electric Vehicle Battery Components from Recycled Materials,”
February  9, 2023, https://­w ww​.­energy​.­gov​/­lpo​/­articles​/­lpo​-­offers​-­conditional​-­commitment​
-­redwood​-­materials​-­produce​-­critical​-­electric​-­vehicle. For North Carolina, see PR Newswire,
“Albemarle Secures DOE Grant for US-Based Lithium Facility to Support Domestic EV Supply
Chain,” October 19, 2022, https://www.prnewswire.com/news-releases/albemarle-secures-doe​
-grant-for-us-based-lithium-facility-to-support-domestic-ev-supply-chain-301653808.html.
18. ​US Department of State, “Minerals Security Partnership,” June 14, 2022, news release,
https://­w ww​.­state​.­gov​/­minerals​-­security​-­partnership.
19. ​V. Balaram, “Rare Earth Elements: A Review of Applications, Occurrence, Exploration,
Analysis, Recycling, and Environmental Impact,” Geoscience Frontiers 10, no. 4 (July 2019):
1285–303, https://­w ww​.­sciencedirect​.­com​/­science​/­article​/­pii​/­S1674987119300258.
20. ​Saptarshi Das, Gabrielle Gaustad, Ashok Sekar, and Eric Williams, “Techno-economic
Analysis of Supercritical Extraction of Rare Earth Elements from Coal Ash,” Journal of Cleaner
Production 189 (July  2018): 539–51, https://­w ww​.­sciencedirect​.­com​/­science​/­article​/­abs​/­pii​
/­S 0959652618309338​? ­via%3Dihub. See also “Current Prices of Rare Earths,” Institut für
Seltene Erden und Metalle AG, 2019, https://­en​.­institut​-­s eltene​-­erden​.­d e​/­a ktuelle​-­preise​
-­von​-­seltenen​-­erden.
21. ​Lynas Rare Earths, “Did You Know—Rare Earth Magnets Mean Wind Turbines Are Now
Highly Efficient,” 2021, https://­lynasrareearths​.­com​/­products​/­how​-­are​-­rare​-­earths​-­used​/­wind​
-­turbines.
22. ​Paul Fears, “Rare Earth Magnets in Electric Vehicle Motors,” Bunting, 2021, https://­w ww​
.­bunting​-­berkhamsted​.­com​/­rare​-­earth​-­magnets​-­in​-­electric​-­vehicle​-­motors.
23. ​ACS, “Smartphones: Smart Chemistry,” April/May  2015, https://­w ww​.­acs​.­org ​/­education​
/­resources​/­highschool​/­chemmatters​/­past​-­issues​/­archive​-­2 014​-­2 015​/­smartphones​.­html.
24. ​Dolf Gielen and Martina Lyons, “Critical Materials for the Energy Transition: Rare Earth
Elements,” International Renewable Energy Agency, 2022, 6, https://­w ww​.­irena​.­org ​/­​-­​/­media​
/­Irena​/­Files​/ ­Technical​-­papers​/­IRENA ​_­Rare​_­Earth​_­Elements​_­2 022​.­pdf​?­rev​=­6 b1d592393f245f19
3b08eeed6512abc.
25. ​Patricia Alves Dias, Silvia Bobba, Samuel Carrara, and Beatrice Plazzotta, “The Role of
Rare Earth Elements in Wind Energy and Electric Mobility,” Joint Research Centre (European
Commission), 2020, 14, https://­op​.­europa​.­eu​/­en​/­publication​-­detail​/­​-­​/­publication​/­2ea6ecb2​
-­4 0e2​-­11eb​-­b27b​-­0 1aa75ed71a1​/­language​-­en#:~:text​=­E xamples%20of%20critical%20raw%20
materials,several%20applications%20in%20other%20fields.
26. ​US Geological Survey, “Mineral Commodity Summaries,” January 2021, https://­pubs​.­usgs​
.­gov​/­periodicals​/­mcs2021​/­mcs2021​-­rare​-­earths​.­pdf.
27. ​Gielen and Lyons, “Critical Materials.”
28. ​US Department of Energy, Rare Earth Permanent Magnets: Supply Chain Deep Dive
Assessment, February  24, 2022, 26, https://­w ww​.­energy​.­gov​/­sites​/­default​/­files​/­2 022​- ­0 2​
/­Neodymium%20Magnets%20Supply%20Chain%20Report%20​-­% 20Final​.­pdf.

22   TIMBIE ET AL.  U  PROGRESS ON CRITICAL MATERIALS RESILIENCE

29. ​Government of Canada, “The Canadian Critical Minerals Strategy,” 2022, https://­w ww​
.­canada​.­ca​/­en​/­campaign​/­critical​-­minerals​-­in​-­canada​/­canadian​-­critical​-­minerals​-­strategy​
.­html#ab.
30. ​Government of Canada, “Rare Earth Elements Facts,” 2023, https://­natural​-­resources​
.­canada​.­ca​/­our​-­natural​-­resources​/­minerals​-­mining ​/­minerals​-­metals​-­facts​/­rare​-­earth​-­elements​
-­facts​/­2 0522.
31. ​MP Materials, “What We Do,” 2022, https://­mpmaterials​.­com​/­what​-­we​-­do.
32. ​US Geological Survey, “Rare Earth Elements—Critical Resources for High Technology,” 2002,
https://­pubs​.­usgs​.­gov​/­fs​/­2 002 ​/­fs087​- ­0 2.
33. ​John Tkacik, “Magnequench: CFIUS and China’s Thirst for US Defense Technology,” Heritage
Foundation, May  2, 2008, https://­w ww​.­heritage​.­org ​/­asia​/­report ​/­magnequench​-­cfius​-­and​-­chinas​
-­thirst​-­us​-­defense​-­technology.
34. ​Tkacik, “Magnequench.”
35. ​Tkacik, “Magnequench.”
36. ​Amy King and Shiro Armstrong, “Digging Into the Rare Earth Embargo,” Crawford School
of Public Policy, 2013, https://­crawford​.­anu​.­edu​.­au​/­news​-­events​/­news​/­2432 ​/­digging​-­rare​-­earth​
-­embargo; Reuters, “China Denies Banning Rare Earths Exports to Japan,” 2010, https://­w ww​
.­reuters​.­com​/­article​/­us​-­china​-­japan​-­minerals​/­china​-­denies​-­banning​-­rare​-­earths​-­exports​-­to​
-­japan​-­idUKTRE68M0PF20100923.
37. ​For Molycorp’s investment, see Lara Seligman, “China Dominates the Rare Earths Market.
This US Mine Is Trying to Change That,” Politico, December  14, 2022, https://­w ww​.­politico​.­com​
/­news​/­magazine​/­2 022 ​/­12 ​/­14​/­rare​-­earth​-­mines​- ­0 0071102.
38. ​Andrew Topf, “Mountain Pass Sells for $20.5 Million,” Mining​.­com, June 16, 2017, https://­
www​.­mining​.­com​/­mountain​-­pass​-­sells​-­2 0 ​-­5​-­million.
39. ​MP Materials, “MP Materials Begins Construction on Texas Rare Earth Magnetics Factory to
Restore Full US Supply Chain,” news release, April 21, 2022, https://­mpmaterials​.­com​/­articles​
/­mp​-­materials​-­begins​-­construction​-­on​-­texas​-­rare​-­earth​-­magnetics​-­factory​-­to​-­restore​-­full​-­us​
-­supply​-­chain.
40. ​For Defense contracts, see DoD, “DoD Awards $35 Million.”
41. ​MP Materials, “MP Materials Begins Construction.”
42. ​DoD, “DOD Announces Rare Earth Element Awards.”
43. ​DoD, “DoD Awards $35 Million.”
44. ​MP Materials, “MP Materials Begins Construction.”
45. ​Mary Hui, “A Chinese Rare Earths Giant Is Building International Alliances Worldwide,”
Quartz, February  19, 2021, https://­qz​.­com​/­1971108​/­chinese​-­rare​-­earths​-­giant​-­shenghe​-­is​
-­building​-­global​-­alliances.
46. ​Cecilia Jamasmie, “Only Rare Earths Miner in US to Bypass China in Supply Deal with
Sumitomo,” Mining​.­com, February  22, 2023, https://­w ww​.­mining​.­com​/­us​-­only​-­rare​-­earths​
-­miner​-­to​-­bypass​-­china​-­in​-­supply​-­deal​-­with​-­sumitomo.
47. ​Adamas Intelligence, “Implications: Tesla Announces Next Generation Rare-Earth-Free
PMSM,” March  2, 2023, https://­w ww​.­adamasintel​.­com​/­tesla​-­rare​-­earth​-­free​-­motor.
48. ​Amina Bensalah, Georges Barakat, and Yacine Amara, “Electrical Generators for Large
Wind Turbine: Trends and Challenges,” Energies 15, no. 18 (2022): 6700, https://­w ww​.­mdpi​.­com​
/­1996​-­1073​/ ­15​/ ­18​/­6700. See also Henk Polinder, Frank F. A. van der Pijl, Gert-Jan de Vilder,
and Peter J. Tavner, “Comparison of Direct-Drive and Geared Generator Concepts for Wind
Turbines,” IEEE Transactions on Energy Conversion 21, no. 3 (September 2006): 725–33, https://­
ieeexplore​.­ieee​.­org ​/­document ​/­1677663.

HOOVER INSTITUTION  U  STANFORD UNIVERSITY   23

 49. ​Ayman Elshkaki, “Sustainability of Emerging Energy and Transportation Technologies Is
Impacted by the Coexistence of Minerals in Nature,” Communications Earth & Environment 2,
no.  186 (2021), https://­w ww​.­nature​.­com​/­articles​/­s 43247​- ­0 21​- ­0 0262​-­z.
50. ​This research was originally funded by DoE’s Advanced Research Projects Agency–Energy
(ARPA-E). See “Rare Earth Alternatives in Critical Technologies,” September 29, 2011, https://­
arpa​-­e​.­energy​.­gov​/­technologies​/­programs​/­react.
51. ​Isabelle de Moraes and Nora M. Dempsey, “Nanocomposites for Permanent Magnets,”
in New Trends in Nanoparticle Magnetism, ed. Davide Peddis, Sara Laureti, and Dino Fiorani
(Cham, Switzerland: Springer, 2021), 403–33.
52. ​US Geological Survey, “Mineral Commodity Summaries,” January 2022, https://­pubs​.­er​.­usgs​
.­gov​/­publication​/­mcs2022.
53. ​US Geological Survey, “Mineral Commodity Summaries” (2022).
54. ​Energy Policy Research Foundation (EPRINC), “Chart of the Week #2023–08: Lithium—an
Upstream View,” February  2023, https://­eprinc​.­org ​/­wp​-­content ​/­uploads​/­2 023​/­0 2 ​/­EPRINC​
-­Chart2023​-­0 8​-­LithiumPrices​-­UpstreamView​-­Version1​.­pdf.
55. ​EPRINC, “Chart of the Week.” The overall cost of batteries in such a pack, which contain
other elements as well as control electronics and packaging structures, is multiples of that
lithium price.
56. ​IEA, “Global EV Outlook 2022,” 176.
57. ​McKinsey & Co., “Lithium Mining: How New Production Technologies Could Fuel the Global
EV Revolution,” April  12, 2022, https://­w ww​.­mckinsey​.­com​/­industries​/­metals​-­and​-­mining ​/­our​
-­insights​/­lithium​-­mining​-­how​-­new​-­production​-­technologies​-­could​-­fuel​-­the​-­global​-­ev​-­revolution;
McKinsey & Co., “Power Spike: How Battery Makers Can Respond to Surging Demand from EVs,”
October  18, 2022, https://­w ww​.­mckinsey​.­com​/­capabilities​/­operations​/­our​-­insights​/­power​-­spike​
-­how​-­battery​-­makers​-­can​-­respond​-­to​-­surging​-­demand​-­from​-­evs. It is important to note that
lithium-ion batteries also contain other metals with potentially problematic reliability of supply
as demand grows, including cobalt and nickel.
58. ​World Economic Forum, “This Chart Shows Which Countries Produce the Most Lithium,”
January  5, 2023, https://­w ww​.­weforum​.­org ​/­agenda​/­2 023​/­0 1​/­chart​-­countries​-­produce​-­lithium​
-­world.
59. ​James Fernyhough, “Australia Could Grab 20% of World’s Lithium Refining by 2027,”
Bloomberg, October  3, 2022, https://­w ww​.­bloomberg​.­com​/­news​/­articles​/­2022​-­10 ​- ­0 3​/­australia​
-­could​-­grab​-­2 0 ​-­of​-­lithium​-­refining​-­capacity​-­by​-­2 027.
60. ​Global Business Reports, “Chile Mining 2021, Lithium,” https://­projects​.­gbreports​.­com​/­chile​
-­mining​-­2 021​/­lithium.
61. ​IEA, “Role of Critical Minerals,” 140.
62. ​Ying Sun, Qi Wang, Yunhao Wang, Rongping Yun, and Xu Xiang, “Recent Advances in
Magnesium/Lithium Separation and Lithium Extraction Technologies from Salt Lake Brine,”
Separation and Purification Technology 256 (February 2021): 117807.
63. ​Robert F. Service, “Seawater Could Provide Nearly Unlimited Amounts of Critical Battery
Material,” Science, July  13, 2020, https://­w ww​.­science​.­org ​/­content ​/­article​/­seawater​-­could​
-­provide​-­nearly​-­unlimited​-­amounts​-­critical​-­battery​-­material.
64. ​White House, “Building Resilient Supply Chains.”
65. ​US Department of Energy, “National Blueprint for Lithium Batteries 2021–2030,” June 2021,
https://­w ww​.­energy​.­gov​/­sites​/­default ​/­files​/­2021​- ­0 6​/­FCAB%20National%20Blueprint%20Lithium​
%20Batteries%200621​_­0​.­pdf.
66. ​US Department of Energy, “Biden-Harris Administration Awards $2.8 Billion to Supercharge
US Manufacturing of Batteries for Electric Vehicles and Electric Grid,” news release, October 19,
2022, https://­w ww​.­energy​.­gov​/­articles​/­biden​-­harris​-­administration​-­awards​-­28​-­billion​-­super​
charge​-­us​-­manufacturing​-­batteries.

24   TIMBIE ET AL.  U  PROGRESS ON CRITICAL MATERIALS RESILIENCE

67. ​US Department of Energy, “LPO Offers Conditional Commitment to Redwood Materials.”
68. ​US Department of Energy, “US Department of Energy Announces $2.5 Billion Loan to Ultium
Cells for Three Domestic Battery Cell Manufacturing Facilities,” news release, December 12,
2022, https://­w ww​.­energy​.­gov​/­articles​/­us​-­department​-­energy​-­announces​-­25​-­billion​-­loan​-­ultium​
-­cells​-­three​-­domestic​-­battery​-­cell.
69. ​US Department of Energy, “LPO Announces Conditional Commitment to Ioneer Rhyolite Ridge.”
70. ​National Mining Association, “Lithium Batteries in Defense,” October 20, 2021, https://­nma​
.­org ​/­2 021​/­10​/­2 0​/­lithium​-­batteries​-­in​-­defense.
71. ​European Commission, “State Aid: Commission Approves €3.2 Billion Public Support by
Seven Member States for a Pan-European Research and Innovation Project in All Segments of
the Battery Value Chain,” December 9, 2019.
72. ​GlobeNewswire, “Lithium Americas Provides General Motors Transaction Details and
Update on Construction Plan for Thacker Pass,” news release, January 31, 2023, https://­w ww​
.­globenewswire​.­com​/­news​-­release​/­2 023​/­0 1​/­3 1​/­2 598482 ​/­0​/­en​/­Lithium​-­A mericas​-­Provides​
-­General​-­M otors​-­Transaction​-­Details​-­and​-­Update​-­on​-­Construction​-­Plan​-­for​-­T hacker​-­Pass​
.­html.
73. ​This is witnessed by the number of US-based battery manufacturing joint ventures recently
announced with China-based firms, particularly in lithium iron phosphate battery technologies.
See Matt Blois, “Lithium Iron Phosphate Comes to America,” Chemical & Engineering News 101,
no.  4 (January  29, 2023), https://­cen​.­acs​.­org ​/­energy​/­energy​-­storage​-­​/­Lithium​-­iron​-­phosphate​
-­comes​-­to​-­America​/­101​/­i4.
74. ​IEA, “Role of Critical Minerals,” 84.
75. ​IEA, “Role of Critical Minerals,” 119.
76. ​IEA, “Role of Critical Minerals,“ 122.
77. ​Oak Ridge National Laboratory, “Game-Changing Rare-Earth Elements Separation
Technology Licensed to Marshallton,” November  30, 2021, https://­w ww​.­ornl​.­gov​/­news​/­game​
-­changing​-­rare​-­earth​-­elements​-­separation​-­technology​-­licensed​-­marshallton.
78. ​US Department of Energy, “Can Geothermal Energy Solve the Lithium Shortfall?” October 18,
2021, https://­w ww​.­energy​.­gov​/­eere​/­geothermal​/­articles​/­can​-­geothermal​-­energy​-­solve​-­lithium​
-­shortfall.
79. ​Keith Bradsher, “Why China Could Dominate the Next Big Advance in Batteries,” New York
Times, April  12, 2023, https://­w ww​.­nytimes​.­com​/­2 023​/­0 4​/­12 ​/­business​/­china​-­sodium​-­batteries​
.­html.
80. ​Darren Thompson, “Tribes’ Latest Challenge Thacker Pass Mine Rejected by Court;
Construction Underway,” Native News Online, March 28, 2023, https://­nativenewsonline​.­net​
/­environment ​/­tribes​-­recent​-­challenge​-­thacker​-­pass​-­mine​-­rejected​-­by​-­court​-­construction​
-­underway.
81. ​Simon M. Jowitt, Gavin M. Mudd, and John F. H. Thompson, “Future Availability of Non-
renewable Metal Resources and the Influence of Environmental, Social, and Governance Conflicts
on Metal Production,” Communications Earth & Environment 1, no. 13 (September 2020), https://­
www​.­nature​.­com​/­articles​/­s 43247​-­0 20​-­0 011​-­0.
82. ​Bryan Maybee, Eric Lilford, and Michael Hitch, “Environmental, Social and Governance
(ESG) Risk, Uncertainty, and the Mining Life Cycle,” The Extractive Industries and Society
14 (June  2023): 101244, https://­w ww​.­s ciencedirect​.­com​/­s cience​/­a rticle​/­p ii​/­S 2214790X​
23000357.
83. ​David Lawder, “US, Japan Sign Trade Deal on Electric Vehicle Battery Minerals,” Reuters,
March  28, 2023, https://­w ww​.­reuters​.­com​/­business​/­autos​-­transportation​/­us​-­japan​-­strike​-­trade​
-­deal​-­electric​-­vehicle​-­battery​-­minerals​-­2 023​- ­0 3​-­28.
84. ​NS Energy, “Bayan Obo Rare Earth Mine,” https://­w ww​.­nsenergybusiness​.­com​/­projects​
/­bayan​-­obo​-­rare​-­earth​-­mine​/­#.

HOOVER INSTITUTION  U  STANFORD UNIVERSITY   25

 85. ​For China’s market share, see Gavin Thompson, “Can the Rest of the World Repel China’s
Magnetic Pull over Rare Earth Metals?” Wood Mackenzie, May 2022, https://­w ww​.­woodmac​.­com​
/­news​/­can​-­the​-­rest​-­of​-­the​-­world​-­repel​-­chinas​-­magnetic​-­pull​-­over​-­rare​-­earth​-­metals.
86. ​Theophile Pouget-Abadie and Rachel Rizzo, “Beijing and Washington Are Battling over
Africa’s Green Future,” Foreign Policy, May  23, 2023, https://­foreignpolicy​.­com​/­2 023​/­0 5​/­23​
/­africa​-­china​-­united​-­states​-­energy​-­transition​-­environment.
87. ​“Delegations from U.S., EU, UK and More to Attend Critical Minerals Africa Summit,” Energy
Capital & Power, July  10, 2023, https://­energycapitalpower​.­com​/­delegations​-­from​-­u​-­s​-­eu​-­uk​-­and​
-­more​-­to​-­attend​-­critical​-­minerals​-­africa​-­summit.

26   TIMBIE ET AL.  U  PROGRESS ON CRITICAL MATERIALS RESILIENCE

The publisher has made this work available under a Creative Commons Attribution-NoDerivs
license 4.0. To view a copy of this license, visit https://creativecommons.org/licenses/by-nd/4.0.

Copyright © 2023 by the Board of Trustees of the Leland Stanford Junior University

The views expressed in this essay are entirely those of the authors and do not necessarily reflect the
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HOOVER INSTITUTION  U  STANFORD UNIVERSITY   27

ABOUT THE AUTHORS

JAMES TIMBIE JOHN DEUTCH

James Timbie is an Annenberg Distinguished John Deutch is a distinguished visiting fellow at the
Visiting Fellow at the Hoover Institution. From Hoover Institution and an emeritus Institute Professor
1983 to 2016, he was a senior advisor at the at MIT. He previously served as the deputy secretary of
US State Department. defense and as director of central intelligence.

RODNEY EWING ADM. JAMES O. ELLIS JR.

Rodney Ewing is the Frank Stanton Professor
in Nuclear Security and codirector of the
Center for International Security and
Cooperation in the Freeman Spogli Institute
at Stanford University.
Adm. James O. Ellis Jr., USN (Ret.), is an
Annenberg Distinguished Visiting Fellow at the
Hoover Institution. He completed a distinguished
thirty-nine-year navy career as commander of
US Strategic Command.

RAJEEV RAM SULGIYE PARK

Rajeev Ram is a professor of electrical
­engineering at MIT. He previously served as
­program director at the Advanced Research
Projects Agency within the Department of
Energy.
Sulgiye Park is a senior scientist in the global
security program at the Union of Concerned
Scientists. She holds a PhD in geological and
earth sciences, focused on critical resources,
from Stanford University.

DAVID FEDOR
David Fedor is a senior research program man-
ager for the Hoover Institution’s Global Policy and
Strategy Initiative and its Shultz Energy Policy
Working Group.

About the Global Policy and Strategy (GPS) Initiative

The United States faces a different threat landscape in this century than it did in the last. Strategies for meeting the inter-
national security challenges we face today need to address the many attributes of national power. Military strength is nec-
essary but no longer sufficient. Effectively managing our national security problems will require cooperation with allies
and partners, and recognition of the importance of diplomacy, economic strength, and science and technology. The GPS
Initiative offers a fresh look, through a broad lens, to help navigate this emerging security landscape.

For more information about this Hoover Institution initiative, visit us online at hoover​.­org​/­research​-­teams​/­global​-­security​
-­initiative.

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